We answer a ton of questions at Smarter Finance USA about financing skid steers.
Most of the time we end up talking to someone about financing used equipment.
Generally, most shoppers have the same 5 questions.
The questions we are asked most are:
- Do I have to own a business to get financing?
- What does it take to qualify?
- What are the rates?
- Do I have to put any money down?
- Will the equipment I want qualify for a loan or lease?
- How long does it take?
Let's talk about these things.
Skid Steer Loans For Small Businesses
We often field questions from folks who are looking to get a loan for a skid steer they're going to use at home, maybe to plow snow on a large property or to use for building property on some new land they acquired.
While we'd love to provide financing to these folks, there aren't any options on the market that we're aware of, since what loan underwriters look at when making financing decisions is the revenue (money) stream likely to be generated from use of that equipment.
In order to get a loan for equipment you'll need to actually own a business.
What does it take to qualify to finance skid steers?
Most business owners with either reasonable credit or collateral will qualify for some sort of financing.
With that being said, any sort of financing for business is like putting together pieces of a puzzle, so issues can pop up that can make deals not work sometimes.
Like other heavy equipment, skid steers are easier to finance than many other business assets.
Here is a basic rundown based on certain situations:
- In business for 2+ years, decent credit: Almost never a problem
- In business for 2+ years, fair credit: Usually doable, sometimes will require 10% security deposit
- In business for 2+ years, bad credit: May require collateral, sometimes just a security deposit
- New business, decent credit: Usually not a problem
- New business fair credit: Sometimes a problem, but can be done with collateral
- New business, bad credit: You will need collateral equal in value to the cost of what you're financing
By decent credit, that's anything above 650 or so, with fair credit usually being between a 625 and a 650 credit score.
What are Financing Rates on a Skid Steer?
Rates on financing a used skid steer run all over the board, depending on your credit, time in business, and a few other factors. We talk in-depth about financing costs for skid steers in another article, but in general, the average used skid steer we finance costs about $20,000 and is financed for 4 years.
Monthly payments on the above example, in general, look like this if you've been in business a while:
- Good credit (685+): $541
- OK credit, (650+): $640
- Fair Credit (625-650): $680/ month
- Poor Credit: $750-$1,000/ month
For a startup, payments would be a little bit higher, ranging from $735 to $1,000 on 4-year financing.
What Down Payments Are Needed on a Skid Steer?
It depends on which program you qualify for, in general the better your credit and time in business, the lower the cost to get into your financing.
With good credit and time in business, often you can start with 5% down, so $1,000 on a $20,000 machine. Depending on the program that fits best, you may alternatively be asked for one or two payments in advance. New businesses are generally asked for the first and last payment in advance.
On fair credit programs, depending on your overall situationyou will be asked for either first and last, or sometimes first payment plus a 10% security deposit.
Bad credit programs range from either a 10-20% security deposit, to first plus 10% security deposit plus collateral. Collateral can be any salable asset such as other machinery or vehicles.
Will the Equipment I'm Buying Qualify for Financing?
In general, lenders don't like to finance junk equipment, because it's likely not to work for very long and if the equipment breaks and you don't have a revenue stream from it, it makes it less likely that payments will be made.
For that reason, the older and worse the condition the equipment is in, the harder it becomes to get financing. For decent equipment that is under 10 years old from a dealer, there is almost never a problem. At 10-15 years, if the equipment is from a reputable dealer, there is usually no problem.
Where things get tougher is older equipment, or if it is from a private party or auction. Typically rates will rise in these situations, sometimes high enough that the larger finance rates eat totally into the cost savings from buying cheaper equipment. That's not to say the deals can't get done on these machines, but be prepared for rates to be a little bit higher, and sometimes the deal will require collateral.
How Long Does it Take to Get Equipment Financing?
It depends - if you've got good credit and have been operating for over 24 months often times the deal can be done in one day. In other situations, it may take 2-7 days to make everything work - but like everything in business finance, there are always exceptions on both sides.
Smarter Finance USA can help you Finance Your Skid Steer. To learn more, please contact us or call (866) 631-9996.